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The Minimum Terms and Conditions of Professional Indemnity Insurance for Solicitors

By Aoife Skehan, Senior Solicitor, Litigation Department

Professional Indemnity Insurance for solicitors and registered lawyers in this jurisdiction is written within the framework of the Minimum Terms and Conditions of Professional Indemnity Insurance (“the Minimum Terms”). The Minimum Terms provide the scope of cover which a participating insurer is obliged to provide to indemnify the insured solicitor. Each such policy of insurance issued must be construed so as to comply with the requirements of these Minimum Terms and in the event that there is a conflict between a policy’s terms and conditions and the Minimum Terms, the policy must provide that the Minimum Terms shall prevail. The Minimum Terms were amended by Statutory Instrument which came into operation on the 1st December, 2013. The main changes to the Minimum Terms are in respect of:- • The definition of Legal Services • The definition of a Succeeding Practice • The operation of what is referred to as the “double trigger”.Legal Services The Minimum Terms stipulate that insurance provided on foot of same must indemnify an insured solicitor as against civil liability arising from the provision of ‘Legal Services’, as defined. The definition of Legal Services has now been amended to also cover solicitors or registered lawyers acting as a Personal Insolvency Practitioner as defined within the Personal Insolvency Act, 2012.Succeeding Practice The definition of a Succeeding Practice has been widened and it now provides that any firm conducted by a partnership where half or more of the principals of such partnership are identical to those persons who were principals of any partnership that conducted a ‘preceding practice’, will be considered to be a Succeeding Practice. In addition, any practice conducted by a sole practitioner who was one of the principals conducting a ‘preceding practice’ will also be considered to be a Succeeding Practice.Operation of the “Double Trigger”

The most significant amendments contained within the Minimum Terms concern the operation of what is referred to as the “double trigger”. By way of background, the minimum terms and conditions which came into effect from 1st December, 2009 introduced an obligation on the insurer to indemnify an insured solicitor against civil liability in two circumstances:- (i) In respect of a claim first made against the solicitor and notified to the insurer during the period of insurance in question; or (ii) in respect of a liability which arose from circumstances first notified to the insurer during that period of insurance. Therefore, from 1st December, 2009 it was no longer sufficient that a claim was made during a particular indemnity period but there was also an obligation on the insured solicitor to notify that claim within the said indemnity period. In essence the policy was a ‘claims made and notified’ policy and this is what is commonly referred to as the “double trigger”. The minimum terms which came into effect from the 1st December, 2011 introduced a three day grace period at the expiry of an indemnity period and within which an insured solicitor could notify a claim or circumstance (of which it was aware during the indemnity period) to its insurer. The current Minimum Terms have been further amended such that the participating insurer must indemnify an insured solicitor in respect of:- (i) a claim first made against an insured solicitor or arising from circumstances (as defined) which the insured solicitor first became aware of, during an indemnity period commencing on or after 1st December, 2013; and (ii) notification to the insurer during that or a subsequent indemnity period; and (iii) where the insured solicitor maintained continuous insurance cover with that insurer, without interruption, from the period of insurance during which the claim was first made or during which the insured solicitor first became aware of circumstances, until the date of notification of the claim or date of notification of the circumstances, to the insurer in question. Such a claim is now referred to as a ‘Historic Claim’ and such circumstances are referred to as ‘Historic Circumstances’. It would appear from the wording of the Minimum Terms that the applicability of the rules in respect of continuous cover are not retrospective. In addition, the Minimum Terms have been further amended in respect of self-insured excess and limits of liability pertaining to a Historic Claim and/or Historic Circumstance. In circumstances where an insured solicitor has changed insurer and therefore does not satisfy the continuous cover provisions contained within the Minimum Terms, then the “double trigger” provisions will continue to apply.